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Your company currently has a net cash flow of $800,000. You expect the net cash flows to grow at a constant rate of 3% if
Your company currently has a net cash flow of $800,000. You expect the net cash flows to grow at a constant rate of 3% if you make no new investments. However, you have just been offered an opportunity to invest in a food business that is projected to generate $400,000 of NPV. You require a rate of 10% for your investments and there are currently 200,000 shares outstanding in your company. What is the price per share if you don't undertake the swimsuit business? What is the price per share if you undertake the swimsuit business? (6 points
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